| Seece said: Yeah Sony stocks will climb when PS4 is announced, they're completely ignore the absoloute billions the PS3 lost in the first few years. |
Although I question whether or not you're being sarcastic, you're probably right. The markets no longer reflect the fundamentals. Those who take the Sony shares seriously (those with enough buying power to have an overall effect on the price tag of a share) would have long ago made their decision about the PS4, and sold/bought accordingly. Other investors will read the headlines about a PS4, and will jump on the shares.
What's more, you have to factor in that investors suffer loss-aversion. Basically, they tend to forget the bad stuff, and only focus on the good stuff, you can see it all the time in the markets. An example would be Netflix - a few months ago, they announced a business plan change that alienated many customers, and lost them a lot of business. The shares dropped slightly. Later, they announced that they were reverting back to the old plan - shares skyrocketed way beyond what they previously dropped, despite the fact they had lost a lot of customers in the process.
You see the trend, on the whole, with the Eurocrisis. Yesterday, Germany failed their bund auction, today Portugal had their credit rating cut, and Italy's 10-year bonds hit a very important, and bad, 7% mark. The markets hardly dropped at all. If European ministers were to announce that they were going to have a meeting tomorrow to discuss these issues, you can guarantee that the stock market will have a killer day - no matter what the outcome of the meeting is.
It actually boils down to human nature. In casinos, people losing money don't quit, on the hope that they have a turn around, and win the money back. Those winning lots of money will carry on continuing. The end result is always the same, whether with customers in a casino, or investors in the markets: there's an artifical high for a while, but ultimately, there will be a massive loss.
